Category Archives: Retail sales

In rebound mode, but nothing as yet to suggest trend of slowing growth cycles has been broken.

Motor Vehicle and Parts sales, a key driver of sales growth heretofore, looks to have slipped to a much lower gear: less consumer credit growth fuelling demand?

Retail sales adjusted for CPI ex shelter and adjusted for population growth only just bubbling up around pre crisis levels.

Seasonality: some questions over the extent to which seasonality is impacting the data.

Inventory to retail sales growth at historically high levels: economy exposed to heightened short term risks to spending.

CPI ex shelter, flatlining post 2012.

Boundaries to retail sales growth: consumer credit to disposable income ratios, long term income growth declines, peak personal consumption expenditures and continuation of weak profile post late 1990s: longer term dynamics at play.

April is seasonally a weak month and any transfer of consumption capacity to it would skew the monthly data in favour of a higher seasonally adjusted change.

It is not the rebound in the data that is important but the strength of the trend. The pattern over the last 3 years is for a weakening in the strength of the rebound and retail sales growth.

Inventories are high relative to sales but they have likely never been higher once we factor in the growth rate of inventories relative to sales.

And the supporting graphics:

Seasonally adjusted retail sales grew at the fastest rate for some time. Eye popping almost! But April is typically a weak month and we have had relative weakness during Q1 2016.

The following chart shows the actual, unadjusted, expenditure on a monthly basis for the above seasonally adjusted chart. If consumption capacity had been transferred to April from prior months its adjusted impact would have been skewed.

More importantly is whether the rebound in adjusted consumption represents a continuation of a weakening trend or not? This is the real question!

The highest level since 2004/2005. However, once we realise that 2004/2005 inventory levels accompanied higher retail sales growth relative to inventory growth we can see that the inventory/sales dynamic is weaker still.

US retail sales (I am still waiting for the CPI update which will allow for a better assessment of retail volumes) took a further hit in March:

The biggest contributor to the recent slide has been motor vehicles and parts sales. This component has also been the biggest contributor to retail sales growth post the 2008/2009 recession and a large contributor to significant increases in consumer credit debt loads:

The inventory picture has also darkened with the longer term inventory to sales relationship showing an unusual divergence:

Nominal retail sales data is typical of a recessionary environment, but much of this is due to declining gas prices. Manufacturing output and new order data is also typical of recessionary conditions. Motor vehicles and parts sales/new orders/output are still strong data points albeit showing signs of weakening, especially in the auto components. Cycle to cycle we see retail sales, orders and output all failing to establish a clear positive post crisis fundamental growth trajectory. That said there does not appear to any abrupt collapse in the data which is not necessarily a positive.

As world growth appears to be slowing an awful lot is riding on US retail sales, unfortunately.

Retail sales growth has weakened since the post winter bounce earlier in 2014. Excluding motor vehicles and parts the picture is weaker still. The only bright spot is falling inflation, but only on a shorter term view. Retail and food sales per capita adjusted for CPI are not much higher than they were in 1999.

US retail sales if we move outside the month to month volatility and look at smoothed data (which focuses on capacity as opposed to volatility) and adjust for inflation and population growth is looking weak:

If we just look at nominal and monthly data it looks as if retail sales are recovering strongly as of the June data: